Manchester Financial Kicks Off $1.5B San Diego Redevelopment

By Gail Kalinoski

Manchester Pacific Gateway

After 12 years of planning and legal challenges, construction has finally begun on the $1.5 billion redevelopment of the U.S. Navy’s waterfront property in San Diego, which will include 3 million square feet of office, hotel and retail space. Manchester Pacific Gateway, the largest private waterfront development on the West Coast, is expected to be completed by 2021.

“I’m elated to help shape our waterfront in the city that I love and call home,” Papa Doug Manchester, chairman emeritus of the development firm, Manchester Financial Group, said in a prepared statement. “We have brought together the best architectural and development team in the world to ensure that every detail speaks to the precision, elegance and style that will last for generations to come. Manchester Pacific Gateway is a project for everyone: locally, nationally and worldwide.”

Manchester Pacific Gateway

The team put together by Manchester Financial Group includes world renowned architect Gensler; general contractor Turner Construction; Urban Strategies Group of Flocke & Avoyer for retail leasing; and Cushman & Wakefield for office leasing.

The Navy Broadway Complex will be demolished to make way for the massive mixed-use development that will feature six buildings within eight city blocks, including a new 17-story Class A office building for the Navy Headquarters. The location is bounded by Broadway, Harbor Drive and Pacific Highway and is adjacent to the U.S.S. Midway Museum.

“The Navy is excited to break ground on a new, state-of-the-art Navy Administration Building. The Navy and San Diego have had a strong, mutually beneficial relationship for over 100 years and this project is another important chapter in that history,” Rear Admiral Yancey Lindsey, commander, Navy Region Southwest, said in prepared remarks.

In addition to the Navy Headquarters, the development will include:

• Block 1: a 1.9-acre plaza; a 29-story, 467,000-square-foot office tower; 68,000 square feet of retail; a 198,000 square-foot luxury boutique hotel with 235 keys;
• Block 2: a 29-story, 1 million-square-foot convention center hotel with 1,100 keys; 37,000 square feet of supporting retail;
• Block 3: an 11-story, 197,000-square-foot office building and 75,000 square feet of retail; a 17-story, 373,000-square-foot Navy Headquarters;
• Block 4: an 8-story, 186,000-square-foot office tower and 91,500 square feet of retail; a 4-story, 28,500 square-foot office tower and 63,500 square feet of retail.

Politics, lawsuits delay

Manchester, developer of the Marriott Marquis San Diego Marina, the Fairmont Grand Del Mar and Manchester Grand Hyatt, said he sees the project as the grand entryway to San Diego’s central business district and downtown tourist community.

“In the 12 years that we have worked on this development, our enthusiasm and commitment has never wavered,” he said.

The eight-city-site block had been U.S. Navy property since 1920. After Congress declined to fund a new Navy Headquarters in the1980s, a deal was eventually struck in 2006 to grant a developer a 99-year lease to redevelop the site. But the project was postponed for more than a decade as the recession hit and multiple legal fights ensued. The last main hurdle was cleared in late 2016, when the U.S. Supreme Court declined to overturn a ruling by the 9^th Circuit Court of Appeals and the planning moved forward as the developer sought financing.

In October 2017, Manchester Financial Group hired Berkadia Hotels and Hospitality to seek a $650 million construction loan, but the San Diego Union-Tribune reported Manchester decided the construction loan costs were too high and instead sought private equity investments. Further details on the financing were not available.

Images courtesy of Manchester Financial Group